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Resale Chiefs Emphasize Value of Exchange Benefits

By Donna MilesAmerican Forces Press Service

WASHINGTON, Nov. 22, 2013  When looking for savings in light of budget cuts and sequestration, don’t take arbitrary chunks out of the military exchange services that provide important morale and quality-of-life benefits to service members and their families, the executives who oversee them urged Congress this week.

“At the very time of our community’s greatest need, these funding cutbacks pose great risk to the programs and services which our military members and their families depend on for resilience,” Rosemary Freitas Williams, deputy assistant secretary of defense for military community and family policy, said in testimony before the House Armed Services Committee’s Military Personnel Committee Nov. 20.

“Perhaps more than ever, the members of our military community need to count on the resolve and commitment you have so consistently displayed over the years for the very programs they continue to depend on so heavily,” she said.

Williams emphasized the value of the three military exchange services: The Army and Air Force Exchange Service, Navy Exchange Service and Marine Corps Exchange Service.

Although independent “resale” entities, they partner where it makes sense with a keen eye on improving efficiencies and reducing costs, retired Navy Rear Adm. Robert Bianchi, CEO of Navy Exchange Service Command, told the panel.

“Unlike other government programs, we operate as a true business,” he said. “We have always and will continue to drive internal efficiencies to reduce costs and seek new opportunities to drive top-line sales.”

The exchanges operate primarily with nonappropriated funds. But troubling in this fiscal climate, Bianchi said, are projected cuts to the limited congressionally approved appropriated funds generally used for overseas support. “We are concerned about potential reductions in appropriated fund support to our program,” he told the panel.

Thomas Shull, director and CEO of the Army and Air Force Exchange Service, shared Bianchi’s concern about potential reductions to a service he said directly supports military members, their families and deployed forces.

That support is compounded, Shull explained, through dividends the exchanges contribute to other morale, welfare and recreation programs. By lowering overhead by $100 million during the past 17 months alone, AAFES has boosted that dividend by about 10 percent, he reported.

“Together, we ensure that wherever service members are, an exchange is there to support families,” Shull said. “Our operations increase the combat potential of America’s forces and enhance the probability of mission success for our troops and our country.”

William Dillon, director of the Marine Corps Exchange, called the exchange service “a vital part of the overall non-pay compensation package” for Marines and their families.

Collaborating with the other services whenever possible and leveraging industry partnerships is reducing costs and expanding efficiency to improve this benefit, he said.

“We measure our success by our ability to provide unparalleled customer service, premier facilities and valued goods and services at savings, while also returning a significant dividend to the Marine Corps community,” he said. “With Marine Corps Exchange, Marines and families can rely upon a high-quality product at a fair, competitive price and know that the proceeds are reinvested in the community, creating a stronger Marine Corps.”

The presidents of the Armed Forces Marketing Council echoed the exchange executives in emphasizing the importance of the exchange benefit.

Joseph H. Jeu, director and CEO of the Defense Commissary Agency, also testified during the hearing, sharing his concerns about the impact of budget cuts and sequestration on commissary benefits.

Protecting quality-of-life programs for military members and their families is “not just a readiness issue and resilience issue,” Williams summed up. “It’s also a national security issue and moral imperative.”